The world’s most expensive keystroke

April 23, 2021
by Björn Jeffery
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SvD Näringsliv

This column was first published in SvD Näringsliv, in Swedish, on March 14th, 2021.

The big banks’ outdated software costs them market shares to fintech companies that run both faster and better by making things from scratch. By challenging in a niche and then expanding, a new banking world emerges.

It is August of 2020. An administrator at Citibank has just had the worst working day of their life. With a few keystrokes in an ancient computer system, the person has mistakenly made a payment that is almost 900 million dollars more than intended.

Even worse: a judge in New York, Jesse Furman, will later decide that the recipients of the money are not liable for repayment.

In his statement, the judge wrote: “To believe that Citibank, one of the world’s most sophisticated financial institutions in the world, would have made a mistake that has never happened before, in the billion-dollar district, would be almost irrational.“

The money was an old debt that belonged to the cosmetics company Revlon, and Citibank only intended to pay the interest on the amount. But after the employee at the bank accidentally clicked the wrong buttons in their system, the entire amount was transfered, whereupon the debt was inadvertently settled.

The question is whether it is really so irrational and surprising that banks make mistakes of this kind. The banking world has a large debt of a completely different nature than what is usually found on their balance sheets – their technical debt.

The term “technical debt” refers to the cost of redoing old technical choices that are now outdated and expensive to maintain. The banks’ infrastructure is a good example of this. In the United States, 95 percent of all ATMs use an old programming language called Cobol. Many Swedish banks are run in the same way. The problem with Cobol is that there are very few who can program in it, which in itself means great limitations. All banks know about this, but it is too expensive and cumbersome to get rid of it completely.

A large part of the success in fintech can be explained by the lack of technical debt. You simply start from the beginning. It initially takes longer, which is why fintech companies often focus on a limited part of the major banks’ total offering. The result is a company that is created to deliver a niche product and nothing else.

Thereafter, the company can expand and gradually compete with more services offered by the traditional banks. This is the journey that, for example, Klarna has made very successful. And that is also why the Klarna of today isn’t necessarily the Klarna of tomorrow.

Even outside fintech, people reason similarly. The Swedish company H2 Green Steel recently raised 500 million SEK to develop a completely new type of fossil-free steel. The assessment was that it is easier to start from scratch – completely without established structures and heritage – than to restructure an existing company.

Tesla and Apple – now competitors – share the same philosophy, that it is easier for software companies to learn how to build cars than for car companies to learn software. At least when it comes to self-driving cars, which is what they have in mind. The car industry has, of course, been involved in software for many years, but historically it has mainly been a side job. Now that balance is changing.

In a business that will increasingly be about software, companies’ attitudes and strategies around technology will be absolutely crucial. There is an enticement in starting something new to gain immediate benefits. But at the same time, the uphill battle of building such a company will be enormous.

The Swedish phrase “it sits in the walls” usually has a negative connotation, but everyone who has started their own company knows that there are components you would like to have brought with you from previous workplaces. Everything from culture to infrastructure.

Losing $900 million in one day is, of course, awkward – to say the least. But that figure should probably be seen as low compared to the values ​​the banks risk losing due to their slow actions. For each individual bank offering – from loans to stock trading – there are a plethora of competitors who are ready to take its place.

This column was first published in SvD Näringsliv, in Swedish, on March 14th, 2021.

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Google has their hands in the cookie jar

April 23, 2021
by Björn Jeffery
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SvD Näringsliv

This column was first published in SvD Näringsliv, in Swedish, on March 4th, 2021.

The battle for internet advertising is escalating. But that Google is changing the technology that determines which ads you see is not only done to prevent tougher rules – it is also done to make it more difficult for smaller competitors.

The question of your ad data has polarized Silicon Valley for many years. On one side you have Apple, which is pushing a very hard line against data collection. Since Apple does not sell ads nowadays, they have very little to lose with this stance. On the other side are Google and Facebook, which have ads as their primary business model, and which dominate the digital advertising market worldwide.

Now this balance of power is about to be shifted. It started when Google announced that it intends to remove support for so-called third-party cookies by the end of next year. This means that it becomes more difficult to track consumer behavior between different sites. For you as a consumer, this means that you can avoid seeing that shoe ad wherever you surf, just because you once happened to click on a pair of shoes at a web shop. The announcement comes just a few months after Apple also changed the rules for advertising on its platform iOS and in its browser, Safari, which is the second largest on the market.

Google has a lot of power in the advertising world. First, they are one of the world’s largest advertising companies and thus influential in what is considered the standard. Second, they own by far the largest browser, Chrome, and can use it to determine the type of technology that advertisers are allowed to use.

Why is this happening now? Politicians’ interest in data and privacy issues has increased a lot and is expected to be the focus of future legislation and regulation. The changes that Google makes should thus be seen as a way to prevent something that would probably need to be changed anyway. But acting early they can gain more political leeway. Google itself refers to “users demanding more data integrity, which includes transparency, choice and control over how their data is used”. That is certainly true, but this change will not take place until the end of 2022. It is reasonable to assume that users would like to have more data integrity straight away.

The second reason for the timing is that it hits harder on their competitors than on Google itself. The IT giant will continue to track your behavior on its own sites. So if you use their search engine, watch Youtube or read emails on Gmail, Google will still link that browsing behavior. And it’s no small feat – Alphabet (which owns Google) reaches billions of people through its services. For ad networks that do not control equally large sites, however, it becomes much more difficult. And it almost forces competitors like Facebook to adapt their way of controlling ads as well.

Google’s self-regulation will not stop any ongoing legal processes. Of course, Google knows that. Instead, the outcome may cement another problem – that of a fair market where everyone works with the same set of rules.

When Google itself changes the global standard for digital ads, it does so in a way that benefits them. They have tens of thousands of employees working on these issues. Not all companies have the cost and resources required in order to be able to keep up.

Google has benefited from the unregulated system that made them market leaders. Now they are introducing a new standard that ensures that they stay that way.

This column was first published in SvD Näringsliv, in Swedish, on March 4th, 2021.

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Why digital art is selling for millions of dollars

March 25, 2021
by Björn Jeffery
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SvD Näringsliv

This column was first published in SvD Kultur, in Swedish, on March 1st, 2021.

The legendary auction house Christie’s is selling a digital work of art and thus joining a trend that is growing explosively. The items are suddenly sold for record sums. Will it last?

$1.4 million in seven minutes. This is how much the American artist Micah Johnson sold his new digital artwork “Genesis.001” for recently. But unlike a traditional auction, 1,402 different people were able to buy the work at the same time, and received a certificate as proof of their ownership. The art itself is digital and can be viewed by anyone with a web browser.

The technology behind this new phenomenon is called NFT, which stands for “non-fungible token”. It can be compared to bitcoin and other cryptocurrencies in that the ownership is completely digital and stored in a kind of public logbook, also called a blockchain. The logbook regulates who owns what, and ensures the uniqueness of the purchase.

This is needed as we are talking about digital works of art that could be saved on any mobile phone, completely free. What is sold is therefore more of a formal right to own and trade, rather than the piece itself.

This week, NFT moved into the mainstream, when the historic auction house Christie’s began the first auction of its kind. The artist Beeple’s work “Everydays: The first 5 000 days” will be auctioned off for two weeks and at the time of writing is up to 3 million dollars – and it is likely to increase.

In many ways, this is a natural continuation of Christie’s acclaimed auction of “Portrait of Edmond Belamy”, created by a GAN – Generative Adversarial Network – that is, art created by algorithms. The final price there ended up at 432,500 dollars, almost 45 times higher than estimated.

This new technology raises a wide range of questions. The focus on trade leads to the idea of ​​pure speculation rather than the practice of arts or crafts. The rise in Bitcoin and other cryptocurrencies has led to a general interest increase of all types of digital assets, and this is probably also why NFT has received this recent and major boost.

At the same time, it is too easy to dismiss this category as purely speculative business. The digital format enables both new creative processes and outcomes. In the creation of the series “Arcade machine dreams”, the artist Brendan Dawes used old game graphics which algorithms then processed to create abstract computer sculptures. The result was a playful way to combine nostalgia with a fleeting popular culture.

Another interesting dimension is that the technology enables a new kind of resale right for the artist. When NFT works of art are sold on the secondary market – by both auction houses and private individuals – about ten percent of the sale price goes back to the artist in question.

This addresses what one could think of as an old injustice where many artists have not been able to take part in the great increase in value that their work has created. The technology also makes counterfeiting impossible as you can follow every transaction that has taken place since the work was created.

If you look outside the world of art, you will also find NFT in popular culture, humor, and sports. Eric Nakagawa, the founder of the now classic meme site “I can haz cheezburger”, is now selling the image that started the whole trend of funny cat memes on the internet. More familiar from the physical world is Top Shot, where the American basketball league NBA has created digital collector images, in the form of videos. You can now bid on and own them.

Why then should you own something that others can use in exactly the same way? Maybe it creates a permanence in what is otherwise an almost infinite flow of information, humor and memories. The scrolling on your mobile phone stops temporarily, and you create a traceable manifestation of internet culture.

Art and literature are constantly trying to capture the present. Could this be a way to do just that, for a generation that grew up on the internet?

This column was first published in SvD Kultur, in Swedish, on March 1st, 2021.

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The fight with Facebook where everyone might lose

March 25, 2021
by Björn Jeffery
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SvD Näringsliv

This column was first published in SvD Näringsliv, in Swedish, on February 22nd, 2021.

From having lived in symbiosis – to now being in open conflict. The media companies may have emerged victorious from the first round against the tech giants, but it risks becoming an expensive story that leaves few, if any, winners, writes SvD’s tech analyst Björn Jeffery.

“I get it, Facebook is a terrible, terrible company and deserves lots of blame for lots of bad things that it does. But this ain’t it.”

That’s what Mike Masnick, journalist and CEO of the think tank Copia Institute, said after Facebook chose to block links to Australian news media. This was a counter to the new law that required the tech giants have to pay for domestic journalistic content. Their competitor Google, on the other hand, agreed to this at a cost of an estimated $100 million.

New legislation is also to be expected in Sweden. The Swedish newspaper publishers’ acting CEO Thomas Mattsson said last week that he wants the tech companies to pay for journalism and that it should provide “more fair and reasonable competition.” The relationship between news media and social media, on the other hand, is more symbolic and entangled than what the newspapers’ industry representatives make it sound like.

Let’s back up a little. 2004 was the year Mark Zuckerberg launched his creation “TheFacebook” at Harvard. No one knew that it would change the media world forever, and the media industry breathed optimism – a year later, the American newspapers set a new revenue record.

Then business models started crumbling, but not just because of Facebook.

First, it started with newspapers losing significant revenue from their highly profitable classified ads to sites such as Blocket in Sweden and Craigslist in the USA. Then came a sharp increase in precision in search advertising from companies like Google, and print lost both circulation and revenue. In Sweden, the market share for print advertising fell from 57 percent in 2010 to 20 percent in 2019, according to the Swedish Institute for Media Studies. At the same time, digital ads made the opposite journey – up from 20 to 58 percent over the same period.

Media companies changed, but now needed to drive more traffic to their sites to increase their digital advertising revenue. And where did that come from? Well, from Google and Facebook. I myself have run large-scale search engine optimization projects in a Swedish media group with exactly that purpose. Thomas Mattsson – then editor-in-chief of Expressen – was one of several journalistic leaders who appointed dedicated social media editorial staff in 2014. The tech companies needed content. Media companies needed traffic.

Back to 2021. Where did the symbiosis go?

It is, to say the least, a bit messy since many media companies have invested time and money in building a following in social media, only to then see themselves being downgraded in the algorithms. If you want to be seen now, you have to pay Facebook. A classic bait and switch.

But there is more under the surface. While many media companies have struggled uphill since 2005, the tech giants have broken countless traffic and stock market records. Facebook reached 2.8 billion users in Q4 2020. When media mogul Rupert Murdoch turns this into politics in Australia and passes a bill, which can be partly interpreted as tech companies being held responsible for media companies’ revenue reduction, we risk having a one-sided debate.

It also shifts the focus from regulating the many problematic areas that exist in tech to a single issue of media company financing. These are two important issues to look at, but they are not one and the same. A much better way could have been to tax the tech companies more in each individual country and manage the support for journalism through that.

This regulation can also have far-reaching consequences for the internet in general. Charging to link is an unusually radical proposition. Tim Berners-Lee recently thought that a large-scale rollout of this type of team could “make the web unusable around the world.” And he should know. He invented the World Wide Web in 1989.

The media industry may have won the first battle, but it could be a Pyrrhic victory. In the long run, a free and open internet is best for all parties. Because when one party starts charging for links, others will to follow. That could get expensive for all of us.

This column was first published in SvD Näringsliv, in Swedish, on February 22nd, 2021.

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The Game Stop hysteria is about to get worse

March 25, 2021
by Björn Jeffery
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SvD Näringsliv

This column was first published in SvD Näringsliv, in Swedish, on February 18th, 2021.

The hysteria has barely subsided before it is time for the political aftermath. But when the Game Stop mess now reaches Congress, there’s a big risk that things derail again. The legislator’s knowledge about the internet is simply too low, writes SvD’s Björn Jeffery who lists three questions he wishes they would ask.

A nervous Mark Zuckerberg was wearing a blue suit, white shirt, and a light blue tie. It was April 2018 and he was called to testify before the US Senate about the Cambridge Analytica scandal. Facebook’s CEO was a bit stiff, possibly because he had not done very well on previous occasions in these public contexts.

His rescue came from a somewhat unexpected direction.

In the hearing, Republican Senator Orrin Hatch asked the question “How can you maintain a business model when users do not pay for your service?” Zuckerberg paused, thought about it, and then responded with the now classic phrase “Senator, we run ads.”

He immediately appeared superior to the confused politicians, who did not even understand basic Internet economics.

This is what it usually looks like when the tech giants are summoned for hearings of this nature. A political spectacle where many of the questions are just awkward. Expectations are therefore low when a committee from the House of Representatives on Thursday summons Steve Huffman, CEO of Reddit, Vlad Tenev, CEO of Robinhood, and Youtuber, who started the entire Game Stop rush, Keith Gill.

Here are three areas that politicians should dig further into, but that they probably won’t articulate sharply enough to get any real answers to.

1: Who benefits from your business model?

To understand how tech companies prioritize, one must understand how they make their money.

If the Robinhood app, which offers brokerage-free mobile trading, does not charge for buying and selling shares – where does the revenue come from? Well, to a large extent it comes from them reselling users’ share orders to companies such as Citadel Securities. They can in turn use the data to feed their high frequency trading and take advantage of temporary market imbalances to make money.

The question to Robinhood that should be asked is: Are your app users only there to act as a data source for Citadel’s algorithms?

2: Whose side are you really on?

In Robinhood’s case, they have – with their choice of name if nothing else – positioned themselves as an app for all the people. They have gamified options and derivatives trading. But when the their users came together to trade these financial products, then Robinhood pulled the handbrake and blocked several shares from trading. If you position yourself as a stock app for the people – why do you pander to established Wall Street companies and what did the possible pressure that Robinhood got from the giants look like?

3: Whose interests are represented in the forums?

The Reddit forum Wall Street Bets has over 9 million members. Most write anonymously, with an alias. But as we have also seen in Sweden, there are times when these anonymous accounts act in a strict self-interest, albeit disguised as something else. Ola Serneke is currently being investigated by prosecutors for just this.

Being anonymous on the internet may seem like a right. But that does not mean that you have the right to deceive other people. One would therefore like to ask Reddit’s CEO: When more than nine million people follow one and the same forum – how do you ensure that it does not become a place for structured market manipulation? By either large groups of enthusiasts, or even by the companies in question?


Hearings of this kind unfortunately often become a way for politicians to show themselves in public, rather than actually conducting policy. The reason why tech companies end up in trouble all the time is partly because current legislation allows them to continue as they wish.

The question is how long the public, organizations, and other companies that suffer the consequences from this will think it is good enough. And instead, perhaps start arguing as the Turkish sociologist and journalist Zeynep Tufekci does. She summed it all up like this: “We should stop asking questions to these companies, and start giving them answers instead.”

This column was first published in SvD Näringsliv, in Swedish, on February 18th, 2021.

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Facebook’s Clubhouse clone will fail

March 25, 2021
by Björn Jeffery
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SvD Näringsliv

This analysis was first published in SvD Näringsliv, in Swedish, on February 13th, 2021.

It didn’t even take a week from Mark Zuckerberg guest starring on Clubhouse to the news that Facebook was developing a clone. The pattern of cloning products is recognizable – but rarely works. SvD’s tech analyst Björn Jeffery explains why.

In April 2012, Kevin Systrom received an unusual proposal. Twitter wanted to buy his company Instagram, which at the time had only 13 employees, for half a billion dollars.

His response was even more unusual.

He told Mark Zuckerberg about the sum, went to his house in Menlo Park, and came back with a $1 billion offer from him instead. Systrom and Zuckerberg shook hands, after which he drove up Highway 280 to his home in San Francisco again. The whole deal took three days from start to finish.

Thus began one of the most successful acquisitions in tech history. What looked like a simple photo app has since become one of the world’s largest and most influential social networks. In 2018, Bloomberg valued Instagram at over $100 billion.

In recent weeks, the hype among social media has been about Clubhouse. The app, where you listen and participate in real-time conversations, is spreading quickly and has a unique positioning in the market through its focus on sound. Clubhouse just raised $100 million in venture capital, with a valuation of $ 1 billion.

When Mark Zuckerberg took part in a conversation at Clubhouse the other day, the joke was that it was only a matter of time before Facebook would either buy them or make its own clone. The joke got a little less funny when the New York Times reported a few days later that Facebook was doing just that.

Large companies often find innovative ideas early on. But they often end up in what Harvard professor Clayton Christensen called the innovator’s dilemma. This means that they tend to offer a watered-down version of the innovation to their existing customers, rather than making it perfect for a new customer segment. Facebook has done this many times over with a long line of cloned products that never took off. Who remembers apps like Rooms, Slingshot, or Lasso?

The next difficulty for large companies is how they avoid cannibalizing their existing products. Stratechery analyst Ben Thompson described this as a kind of tax on the company’s own strategy and defined it as “something that makes a product less likely to succeed, but which is included to achieve other business goals”. Google’s failed social network Google+ is an example of how wrong things can get with those kinds of priorities.

Being innovative as a tech company is therefore not as easy as one first might think. You can always copy others, but there is no guarantee of success. It is with this in mind one should view these giant acquisitions. They can be a shortcut to get the best of both worlds: a new, innovative product, and synergies from a larger organization. Since 2007, for example, Facebook has bought 88 companies that we know of.

In the middle of the Clubhouse hype, it’s easy to think back at Instagram. What would have happened if they had decided to go their own way instead? Had we had another tech giant today? The company had – like Clubhouse today – just raised venture capital, so resources were available. But it takes some confidence to turn down a billion dollars for a company that is only two years old.

Now the eyes of the world are on Clubhouse. It is new, innovative, well-funded and is currently spreading virally. But to become completely independent in the future requires perseverance, continuous innovation and, in the long run, a sustainable business model. Clubhouse has time to find all three – even if the giants will be chasing them.

The tech world would be better off with more big players. Therefore we can hope that Clubhouse founders Rohan Seth and Paul Davison look more towards Snap than Instagram when the acquisition offers start coming in.

Zuckerberg also tried to buy Snap for $3 billion in 2013 – but they refused. Today, Snap has an all-time high on the stock market with a market capitalization of over $93 billion.

This analysis was first published in SvD Näringsliv, in Swedish, on February 13th, 2021.

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The n00b of Wall Street

February 10, 2021
by Björn Jeffery
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SvD Näringsliv

This analysis was first published in SvD Näringsliv, in Swedish, on February 4th, 2021.

Live streamed portfolio analysis. Derivatives as entertainment. The Wall Street Bets forum represents a new generation of stock traders who have borrowed their influences from the computer game world.

At the same time as the hedge funds was tearing their hair over extreme losses in Gamestop, a father of small children in Boston, wearing a headband, sat and drank champagne for seven hours – live on YouTube. Keith Gill, the man behind the Gamestop rally, celebrated his success with the dedicated fans who had followed him for a long time. Now, at least on paper, he was suddenly extremely wealthy.

It may not sound like the traditional stock trader. But this is not the first time that the stock market gets new eccentric personalities or, for that matter, reshapes itself.

Take only the last decades where the image of men in braces on the trading floor has long since disappeared and been replaced by high-frequency trading. We have seen lively discussions on social media about individual stocks for many years, and it is still big today. Now we see how the stock market is changing again – and that it borrows many of its influences from the gaming industry. The fact that it was Gamestop that everyone gathered around had mostly to do with short selling, but also contained components of pure nostalgia. People grew up with these American gaming stores, and that meant something to buyers.

Kenyatta Cheese, an expert in Internet culture, described the Gamestop boom as “a place for collaborative participation whether you invest or not”. He then explained how the incentives for each person vary greatly. Some are there to make money, some just for fun. Some are Keith Gills fans and most want to tag along to him.

You don’t need to trade stocks yourself to participate. For many, it is enough to watch when others do. Twitch – the streaming service for games that Amazon bought in 2014 for close to a billion dollars – has an average of 1.4 million viewers at any time of the day. Watching and discussing games is seen as an equal way to participate, just like with regular sports and the fan culture that is there. Now we also see it in stock trading.

The language used is familiar to those who know gaming and internet culture.

In Sweden, close to 400,000 people watched e-sports in 2017 daily, a figure that is said to be significantly higher today. The fact that we will soon have established Swedish stock streamers is therefore not far off.

The language used is also familiar to those who know their gaming and internet culture. Memes and emojis are more the rule than the exception. They talk about stocks as “stonks”, a deliberate misspelling of “stocks” that has been a meme for several years. “To the moon” followed by emoji rockets means that it is believed that the value of the share will skyrocket.

The jargon is playful, internal and closely related to the online culture in general. This means that many can move more seamlessly between games, social media and stock trading in a familiar way. Language and humor become the bridge between the different areas and open up a world that for many of them may have been a bit closed before.

As the stock market approaches the gaming world, risks follow for both the individual and the system. The fact that access to complex financial instruments was limited also meant that the risks for small traders were reduced. You seldom lost more money than you had, and usually not the whole amount either. When access to options and other derivatives increases, it has the opposite effect. And it can have fatal consequences. In June last year, a young man took his own life after misunderstanding his debt in the Robinhood app.

In addition, the share price itself could be a threshold. But Robinhood, which offers brokerage-free trading and also gives new customers a free share, now allows stock trading with so-called “fractional shares”, ie parts of a share. That means you can buy Tesla shares for $100, even if a single share costs around $850. That makes it easier to participate in the market, even with very small amounts. Lowering the barriers to entry for the stock market is a double-edged sword – both a democratization and an increased risk exposure.

The biggest factor that distinguishes what we now see from what we have been used to is its scale. When I wrote about the Wall Street bets forum on Reddit last week, it had 3.5 million members. Now the figure is 8.4 million. When millions of people can buy shares, on their mobile phones, with as little as $10 in investment – then shock waves are created in the financial system. Shock waves that get bigger by millions of participants who watch, discuss and trade on the stock exchange together. Many of them are now also forced to discover a truth that the most hardened stock traders have known for a long time: stocks do not just go up in value.

A stock market bubble filled with anger

February 9, 2021
by Björn Jeffery
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SvD Näringsliv

This analysis was first published in SvD Näringsliv, in Swedish, on January 28th, 2021.

First the Capitol was stormed by users from internet forums. Now it’s Wall Street’s turn. The Gamestop story is a perfect storm of pent-up anger and risky financial instruments that are now traded at the touch of a button.

In the early 2000s, the American journalist James Surowiecki wrote an acclaimed book called “The wisdom of crowds”. His thesis was that a properly composed group of people together arrive at better answers than each individual.

What we have seen in recent days in the Reddit forum Wall Street Bets is closer to “The anger of crowds”. This is not wisdom from a group – it is anger. An anger that is coordinated, risk-prone, and directed directly at hedge funds and the rest of the Wall Street establishment. By coordinating the purchase of heavily shorted shares, the internet forum has succeeded in creating such a sharp rise that hedge funds must buy shares to save their positions – a so-called short squeeze. Surowiecki describes the development with Gamestop and a number of other shorted shares as a modern internet-mediated stock manipulation.

It would be easy to dismiss the events as just that. But if you read more closely in the forum, this is not just a tactic to make money on option contracts. It is equally important that hedge funds lose huge amounts of money. There were cheers, for example, when hedge fund Melvin Capital needed a $3 billion capital injection as a result of their actions. It is seen as legitimate after many years of what they think is inadequate regulation and huge gains on Wall Street. Or as one Twitter user eloquently summed it up: “Oh no, the wrong people are manipulating the stock market.”

What is happening is a perfect storm that we are likely to witness for a long time to come.

We have a generation that has grown up on the internet, and that seamlessly organizes, discusses, and socializes on social media. Their financial situation looks significantly worse than their parents’, while US student debt amounts to $1700 billion – a doubling since 2010. They saw their worldview change with 9/11 and their economy shattered in the financial crisis.

This group has now been armed with financial instruments that were previously inaccessible to the broad market. Apps like Robinhood, which offers brokerage-free mobile trading, have enabled option trading for millions of people. It is high risk and moves fast. Many people see the stock market more as a casino than as a trading place. In this respect, there are also great similarities with the cryptocurrency bitcoin.

These two things combined have created a risk-averse, angry, and skilfully organized new power factor on the stock market. The people’s own activist fund.

The behavior is also extremely difficult to regulate. The Wall Street Bets forum has over 3.5 million members. On Tuesday, Gamestop was the world’s most traded security. These are not institutions that act. It is crowds of individuals who synchronously do it with the same kind of outcome. But who is then responsible?

What we saw in connection with the storming of the Capitol and with Gamestop this week are two sides of the same coin. These are self-organized groups that are tired of a system that they think has disadvantaged them. They are angry, and now they are taking matters into their own hands – albeit in very different ways.

The rules of the game are now being rewritten very quickly and have no real precedent in history. The personal financial risks are enormous, and can be a severe blow if the air goes out. As Bloomberg journalist John Authers put it: “I don’t want to see the consequences when history’s first angry bubble bursts”.

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Apple snubbed Tesla – now they are competing for the cars of the future

February 8, 2021
by Björn Jeffery
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SvD Näringsliv

This analysis was first published in SvD Näringsliv, in Swedish, on January 28th, 2021.

Elon Musk wanted to sell Tesla – but did not even get a meeting with Apple’s CEO Tim Cook. Today, they are about to become competitors instead. But both have a common view on how the cars of the future will be developed – electric and self-driving.

With today’s share price, it feels like ancient history. But in 2013, things looked dark for Tesla’s CEO, Elon Musk. Car sales did not pick up and it would be another four years before they could launch their cheaper version, the Model 3. Musk approached Apple CEO Tim Cook at the time to inquire if they were interested in buying the company.

Cook refused to even meet with Musk.

The rest is, as we say, history. Cook probably regrets it today. Apple’s long-standing and infamous car investment – Project Titan, which has been going on since 2014 – is delayed, Tesla shares soared and made Elon Musk the world’s second richest person. On Wednesday night, the two companies came with earnings reports – very strong results for Apple, a market disappointment for Tesla.

To understand why cars are even on Apple’s agenda, one need look no further than to Silicon Valley, where I lived and worked for eight years. Every day I saw anonymous cars crammed with sensors. Two people were sitting in each car – but they were self-driving. Their job to collect data calibrate the software. This is also confirmed by vehicle analyst Sam Abuelsamid, who told Axios that “the only thing we actually know for sure is that they have developed and tested automated driving systems”. Building cars is about hardware engineering. Building self-driving cars is about software.

Apple’s interest in cars is not surprising. They are usually not the first with innovations – iPhone and Apple Watch were far from that in their respective segments – but are good at combining hardware and software to create a good experience.

The focus in recent years has been on service development where margins are better and predictability greater. And it has worked – in Apple’s latest quarterly report, services account for 14.1 percent of revenue, $15.8 billion in total.

Apple’s view of margins gives us a clue as to how they think about the car investment. Apple has a gross margin of 38 percent, while the corresponding figure for Volvo Cars is around 16 percent and Tesla at 19 percent. Regular car sales from Apple is therefore unlikely – it simply does not fit. If, on the other hand, you see self-driving cars as a service, rather than a product, it becomes more logical. Maybe Apple Taxi, rather than Apple Car?

This is also where Musk and Cook meet. Elon Musk predicted that he would have a fleet of driverless Tesla taxis by the end of 2020. That has still not happened. But what other carmaker would even formulate that idea? And here we also find part of the explanation for Tesla’s incredible price development over the past year.

Aswath Damodaran, a professor at New York University, describes Tesla as a “story stock”. That definition requires that you are a young company, that you act in a giant market, and that the CEO is a brilliant storyteller. Tesla has all three. And this type of story attracts attention, even from people who do not normally trade in stocks.

When the app Robinhood, which offers brokerage-free stock trading, summed up the year for a 20-year-old student, it turned out that he checked Tesla’s stock price 18,656 times in 2020 – over 50 times a day. When you have that kind of appeal, in combination with an app that has opened up the stock market for a new generation, a p/e ratio over 1,700 matters less.

Tesla represents a new generation of car companies that believe that it is easier for a software company to learn how to build cars, than it is for a car company to learn software. This applies to both electrification and self-driving. These two changes are so great that a clean piece of paper can be a better starting point for speed than being a colossus with a lot of history.

This is exactly what one of the US ditto – General Motors – realized when they already in 2016 acquired the self-driving company Cruise for over a billion dollars. Today, Cruise is valued at $30 billion and has just raised $2 billion in new capital from Microsoft and Honda. At the same time, GM’s own share price is up close to 100 percent in the last quarter.

For all car companies – old and new – it is ultimately about how many cars you can deliver. And here it is worth remembering the actual starting point. In the last quarter of 2020, Tesla delivered just over 180,000 cars, while the corresponding figure for GM was just over 770,000. Apple has – so far – not delivered a single one.

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The gloves are off in the Biden-Zuckerberg fight

February 8, 2021
by Björn Jeffery
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SvD Näringsliv

This analysis was first published in SvD Näringsliv, in Swedish, on January 23rd, 2021.

“I think he’s a real problem.” Joe Biden’s statement about Mark Zuckerberg means that the gloves are off in the battle between Washington and Silicon Valley.

Suddenly, almost everything felt normal again. Just a couple of hours had passed since Joe Biden took over as president when Twitter began filling up with jokes. Not least thanks to the historical photos of Bernie Sanders, who was wearing a winter jacket and mittens during the ceremony. Twitter breathed a sigh of relief after four years of chaos.

It will likely be a brief break, especially for the tech companies’ executives who will probably need to take a deep breath and prepare for the next two years. Much is at stake and all political power is currently with one party – the Democrats control the White House, the Senate and the House of Representatives.

Everyone can agree that these are important issues to be settled. The amount that tech companies spend on lobbying has increased as Silicon Valley has become even more visible on Washington’s political agenda. Today it amounts to about $80 million – up over 600 percent since 2005. That is more than the financial world or the automotive industry spends.

The tech companies are now looking closer at three key points.

1: The tech companies do not want to split up – but can ask for more regulation.

There is already a historic lawsuit running against Google. It’s about them being the default search engine in many browsers. This is considered to be the first of many similar processes where other companies will soon come into focus. Joe Biden’s view of Facebook, for example, became clear when he commented on its CEO Mark Zuckerberg with the words “I think he’s a real problem” and the addition “I have never been a fan of Facebook.”

Here, Facebook’s lobbyists are might pursue a, for many, surprising line of argument – to expand the regulation of tech companies. One can see legislation as a way to limit the power of individual companies, but one can also see it as a way to keep new companies out of the market. Dealing with complex legislation is expensive, something that Facebook can afford. Smaller competitors do not necessarily have the same financial muscles. The regulation could thus prevent small companies from growing, even if that isn’t the intention.

Additionally, there is political momentum from both political sides regarding these issues. The question arose even before Biden took power, when the lobby group American Economic Liberties Project released a series of reports that specifically pointed to the problems that arise from increased power centering around Amazon, Google and Facebook.

The work of the lobby group is led by Sarah Miller. She worked closely with Joe Biden in his transition team, regarding issues such as the size and position of tech companies.

2: A disputed law gets torn up – and to the delight of the tech giants gets a cumbersome replacement.

After the storming of the Capitol, it is clear that the current legislation is not only inadequate, but can also be directly detrimental to democracy. The storming was planned on the tech companies’ platforms, without being able to hold them accountable at all. The issue falls under Section 230 – a law that decouples tech companies from what is said on their services.

In an interview with the New York Times, Joe Biden said that “Section 230 should be revoked immediately.” He also approached the EU by saying that “we should set standards, not different ones that Europeans have in terms of integrity”. A welcome position for the EU after years of more frosty transatlantic diplomacy. The President of the European Commission, Ursula von der Leyen, has called Biden an “ally” when it comes to regulating tech companies. This is an opening for more international co-operation regarding legislation.

Taking responsibility for what is expressed on one’s platform is time consuming and expensive, but not impossible. It is therefore conceivable that the large companies do not lobby to keep Section 230, but ensure that the law that replaces it becomes cumbersome to follow. It would also benefit large and resourceful companies – those who also primarily lobby in Washington.

3: Return to pole position in the international talent hunt.

As one of his first actions, Joe Biden extended DACA – the law that was enacted during Barack Obama’s time in the White House and that gives children with parents without residence permits a path to American citizenship. Apple CEO Tim Cook noted with satisfaction that “we welcome President Biden’s commitment to push through comprehensive immigration reforms that reflect the American values ​​of justice and dignity.”

Although the tech companies have some employees who are affected by DACA, their interest in these issues is mainly about labor immigration.

The tech companies have a hard time finding enough engineers and have become dependent on visas that allow people from other countries to work in Silicon Valley. Donald Trump severely limited the number of visas issued, which created major problems when it came to recruitment. Here it is up to the tech companies to quickly ensure that the political power enables international talent hunting again. Something you have been lagging behind since Trump’s changes.

Three points – three battles. The fight can begin.

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